December 22 2023
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Chamath takes over the Pod
- JCal feeling bad
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Sacks holiday party was huge
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AllinHug
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Red Sea trade disruption
- Houthi
- One of the world’s busiest trade routes disrupted
- Ryan Petersen brought in
- 30% of containers disrupted
- Mostly from Asia to Europe - so they are hit
- 20-25% cut in shipping capacity basically
- This has been a big choke point for 1000s of years
- Rebel forces in Yemen have been launching attacks at the ships
- Can’t operate a ship without insurance - insurance companies won’t insure you
- 3x increase in ocean freight price from Asia to Europe
- Suez Canal is too valuable to modern civilization to allow a group of rebels to hurt it for too long
- This is a Shia group that is very powerful in Yemen - not internationally recognized but have agency and control vast parts of the country
- Is this related to apparent ~80 attacks on US bases in the region in the last few months?
- US might take military action as part of Operation Prosperity Guardian
- If conflict rages through 2024 it might increase prices
- Not good for China because this will impact them a lot
- This might impact Saudi also - they will not be happy
- European inflation might be higher - cost to them is 20% more, cost to east coast of US is 8% more
- Saudi Arabia, Qatar, UAE will align probably to push back on all this instability in the region - against Iran
- China just brokered a peace between Saudi and Iran
- If true that this is a second order effect of the Israel Hamas war, then that’s scary for the world
- Not sure what the diplomatic solution here is - Israel is not backing down, Houthis seem to not be backing down
- Air freight is ~4 times sea freight
- But also volume - 747 can take 7 40 foot containers, but a ship can take 10000 40 foot containers
- Ryan back as CEO of FlexPort
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M&A
- Adobe Figma called off
- Illumina Grail unwound
- Employees, LPs, all affected
- Cigna Humana also called off
- Seems there is no viable M&A path for startups now
- Main path to get liquid is IPO
- But even IPOs are hard because banks won’t underwrite, etc
- Regulators are taking so long and then don’t allow it - this means startups will want a big breakup fee if deal fails - like Figma got $1B from Adobe
- So this chills M&A activity
- In a higher interest rate environment, ROIC is more carefully looked at
- Today Facebook-Whatsapp deal would never happen
- Can’t have risk capital flow into US in this regime
- Now instead use AI tools and raise friends and family round to start a profitable business from day 1
- In the 90s you could get inside information from CEOs
- Then RegFD - regulation full disclosure - passed - good legislation, to make information available to all
- But then only some events held to get information - and analysts can talk to CEOs
- Big Banks can help build some AI tools trained on public financial data
- Alternative view is to build a good business and not worry about liquidity, etc
- If you don’t have to raise capital, you’re better off
- Tech company vs regular company - think more high gross margin vs low gross margin (tech used to be ~80%, non would be ~20%)
- AI might be the biggest disrupter to VC
- 1h2m mark - raise less money, run for longer, own bigger portion of the company, have a smaller, more distributed, more efficient company
- Might have better outcome at $50M-$100M exit vs $2B exit previously
- 1h2m mark - raise less money, run for longer, own bigger portion of the company, have a smaller, more distributed, more efficient company
- Its positive for founders and employees
- Smaller funds achieve better results - from some experience
- Sacks is maybe starting Yammer 3.0
- SaaSGrid success
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Realtor lawsuits
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$1.8B in damages - will hurt the NAR
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Could go more
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6% fee is a convention, not a rule
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Have to be a licensed broker to list a home on MLS
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NAR forms are a bottleneck
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The market is tied up by NAR bureaucracy
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Its basically just a data entry service
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US has 1.6M real estate agents
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Colorado Supreme Court removes Trump from ballot
- To deprive an American citizen of a big right (running for President) for a crime they are not convicted of is a bad sign
- All the judges were democratic appointments
- Democrats don’t want Trump standing for a vote that he might win
- The documents case was a game - its all about keeping him off the ballot
- Liberals are the true authoritarians
- Only people who live in a bubble within a bubble within a bubble think its a good idea
- Drowned in mainstream media, went to Ivy league schools, elected by Democrats
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